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August 06, 2013 at 09:49 AM
Advisors who bemoan continuing low crediting rates on universal life insurance policies and fixed annuities can take solace in this fact: The products remain more attractive savings vehicles than bank deposits, which continue to pay out abysmally low interest rates.
For evidence of this, consider the latest report from GoBankingRates.com. As of Aug. 5, the average annual percentage yield (APY) on checking accounts was a depressingly low 0.11 percent, a 0.03 percent decline from the year-ago period.
Likewise, the average APY on money market accounts was a measly 0.15 percent, a dip of 0.04 percent from the year-ago period. Savings accounts rates also fell by 0.04 percent, matching the average APY on checking accounts at 0.11 percent.
By comparison, crediting rates on fixed annuities generally vary (depending on the contract term and premium) between 1 percent and 2 percent. And guaranteed minimum interest rates paid on universal life insurance policies typically are 4 percent or higher.
